Retail Success: Del Sol Furniture

From the beginning it was more than a dream. Factor in astute strategic planning, entrepreneurial skills, extraordinary persistence and very hard work.

Del Sol Furniture of Phoenix, Arizona, grew from a 2,000 square foot lease on the east side of the city in 1997, to an up-and coming three store chain serving a wide area surrounding the expanding metro area.

The evocative company mission is “Furnishing Dreams”. And their motto, “Always With You!”

Said Vice president Alex Macias, “Del Sol Furniture now has three locations throughout the Valley of the Sun, each with similar structure and product selection. And store managers have leeway in merchandising.”

The Early Days

Alex’s parents, Venancio and Rosa Macias, are Del Sol’s founders. “They met in Mexico City while my father was studying civil engineering,” noted Alex. “After my mother graduated from the university, they moved to Juarez where dad worked as a civil engineer for the government, and my mom worked at Johnson Controls.

“They enrolled my older sister Minerva and me, at no small expense, in private school to learn English. And they obtained visas to enter the United States.”

When the family settled in Phoenix, Arizona, the decision to make their mark in the furniture industry was based on an energetic process of elimination. Alex said, “As an immigrant, knowledge has value. But usually degrees earned in home countries don’t. That’s why lots of immigrants become entrepreneurs. In their own country they may have been a doctor or an accountant, but when they arrive here they have to figure out a way to put food on the table.

“And there aren’t a lot of options. Lots of people are knocking on doors, but not a lot of doors are opened. My parents had never started a business before, but they wanted the American dream.”

Phoenix is Arizona’s capital and cultural center with a population around 1,500,000, the fastest growing city in the United States. Forty-three different languages are spoken in local schools, and it's the home for Fortune 500 companies. Phoenix is a diverse and fascinating city with unlimited opportunity. And, with almost 300 days of sunshine annually, a city waiting for entrepreneurs.

Said Alex, “Over the years my parents tried multiple businesses - shoe stores, dollar stores, a CD and cassette store and, finally the business my uncle was in, furniture. They ultimately came to the conclusion that it’s a lot of work selling one-dollar items to make $500, compared to selling one sofa!”

And the name of the business? “The Greater Phoenix area is known as the Valley of the Sun. And translated into Spanish, that’s ‘Valle del Sol’.” So the Macias’s dream became reality in Del Sol Furniture.

“What made my parents’ company successful was that they found a niche customer overlooked by traditional furniture stores back in the early ‘90s, Spanish speakers who did not have the cash to buy the furnishings they needed.

“But I can tell you that the start was not pretty. When my folks first started, our marketing consisted of going to the swap meets and the flea markets. That was our advertising.
“Our first store was in an area with absolutely zero retail traffic. So every Saturday and Sunday, as a family, we spent the day at swap meets. We brought some samples, a bunk bed and maybe a sofa, a loveseat and some coffee tables. And we’d pass out our business cards. My sister and I were between ages six and 10.

“It was tough to find suppliers back then. Vendors and reps with established distribution tend not to look for start-ups, the up-and-coming furniture stores. They call on and support the big guys to try to keep their sales volume up. But back then there were some reps who traveled to a part of town that wasn’t the best, found my parents and started selling them. Little by little we started creating volume at our first store location in 1989.

“I grew up in the business. As a kid, I assembled as many of the coffee tables that we gave away with purchases as I could in the morning. Until I got bored. Then I’d count the number and think, ‘Oh, man, I got 15 bucks, yeah, it’s going to be a good day!’

“At those weekend swap meets my sister and I weren’t allowed to get hot chocolate until we’d sold a bunk bed! I’ve always been around entrepreneurship in the different businesses we had, worked as a receptionist when I was in high school and at our dollar stores. My Dad had me making deliveries which gave me respect for our delivery and warehouse guys. It is not a fun job to do here in the heat of Phoenix!

Growth

“We moved three times before purchasing our first building in 2002, 23,000 square feet, at 32nd Street and Thomas. “At that time there was a big influx of Hispanic immigrants into the Phoenix area so business was good. Merchandising then was much easier, just about anything we put on the floor would sell.

“When I went to college in 2002, the furniture business, as I said, was doing well, and my parents did not encourage me or my sister to go into the family business. They basically told us, ‘We don’t want you guys to run the furniture store. It’s a lot of work.’ At that point they didn’t have the same management structure we do now and so they were working really long hours, six to seven days a week. I was going to go to law school, then the recession hit, so I put my law career on hold and came into the business at their request and never left. And I think that’s why I’m so passionate about my work with HFA’s Next Gen group. In the 11 years that I’ve been in the business, I’ve met so many dads and moms who did not encourage their kids to enter their businesses. Their kids hear them complain about long hours at retail and how hard it is. So the kids become doctors and lawyers. There’s nobody to run the store and, ultimately, they have to close up shop.

“We had a good ride from 1990 to 2007, and our community really helped us grow. And, again, it had a lot to do with other retailers not really paying attention, or not wanting to serve our customers.

“As our business grew, we had decided to expand to serve other parts of Phoenix. From 1997 all the way to 2007, we opened additional locations. But the recession forced us to downsize.”

“As our business grew, we had decided to expand to serve other parts of Phoenix. From 1997 all the way to 2007, we opened additional locations. But the recession forced us to downsize.”

A Pivotal Moment

“After both my sister and I formally joined the business, the decision was made to expand beyond our focus of serving primarily Spanish speaking credit customers. We already had the stores and the warehouse. I have degrees in computer information systems and accounting, so I knew that we needed to have a strong online presence going forward to evolve digitally, to upgrade our software. Minerva was very helpful to Del Sol during the recession.
“Del Sol lost 50 percent of its sales from 2007 to 2009. We had to close our leased stores and let go of employees. It was chop, chop, chop. But from 2009 on, we started to rebuild, signing on with FurnitureDealer.net to help us create a strong website presence. We upgraded our computer system and expanded our marketing.

“Our website and technology investments have really paid dividends in the last eight years. Back then, our competitors, even those doing business around the corner, probably had no idea who we were. And although we are still not the biggest furniture operation in town, some of the things we’ve done in marketing and technology have really put us on the map.

“Recently we’ve started working with iConnect, a company that is helping us leverage technology to become more efficient, because we don’t have 30 people to help us keep track of certain metrics to make decisions faster.

“I don’t think our operation is unique, but we do measure traffic, sales metrics, our budgets and compute ratios. On the web side, we look at web traffic which everybody else does, plus bounce rate. Because of our credit operation, we do pay special attention to those metrics. My feeling is that the real secret to success concerning metrics is to actively measure and then make the time to use them.

“All of this has allowed us to compete. From 2010 on, we’ve had double digit growth every year.”

The founders are still “as active as they want to be” in Del Sol’s operation. “My mother, Rosa, is Del Sol’s CEO. She is our leader and she has the respect of everybody in the company.
“We own all our buildings. That’s a lesson that my parents learned early on. With his background in civil engineering and infrastructure, my dad enjoys the real estate business. That’s great for me. One less thing to worry about! He makes sure the buildings are in good shape, up to code. Our tenants are happy.”

Typically Alex spends a third of the time "hiring, motivating, leading our people, keeping everybody on task. A third is spent on merchandising, the rest on marketing and technology. Right now, in order to be successful, retailers have to be hands-on.”

Customer Focus

Marketing becomes more complex in a multi-lingual multi-cultural community. “We’ve found it isn’t only the Spanish-speaking, credit-needing customer who has been overlooked or taken for granted. Some retailers just don’t want to deal with customers who have no choice but to buy their furniture from rent-to-own and lease-to-own places. But when we changed our marketing focus, we found there are a lot of these people who want to furnish their homes. They speak many different languages. And they appreciate a store that treats them with respect, helps them navigate a very complex credit system to find the best credit option.

“Del Sol has a full disclosure policy for credit customers. We always explain two or three different finance options. If the best option for a particular customer happens to be lease-to-own with zero down payment but a higher overall cost, we report to the credit bureau to help them improve their credit. That way we can graduate our customers to zero percent interest financing with the Synchronys and Wells Fargos of the world.

“We treat our customers with respect and, more than anything else, it keeps our customers coming back.
“We do offer some credit options directly online without the customer coming in. But at the end of the day our goal is to get customers into our stores. I don’t see a sustainable, long-term model for online only credit stores at this point.

“The most important difference between customers who shop on line or in the stores is convenience. There are some age differences, but the online shopper wants convenience.”

Technology

Alex expresses concern that there are many independent retailers “behind the curve” in implementing technology in their marketing range. “There are so many technology options for retailers. At every conference and Market we go to there’s a new social media platform, a new add-on for your website, a new way to get positive reviews. Do you want kiosks? Are they touch screen? How about TVs all over your stores? There are a million different ways to implement technology! Independent retailers need to choose carefully and ask, ‘Is this new piece of technology going to help me sell more? Is it going to provide a better experience or save money? I think the independents need to look at this more closely than maybe some of the bigger guys who might have 50 people working on their websites. It’s a bigger challenge for stores that have more limited resources, time and maybe talent to understand digital marketing, the newest and the latest and the greatest!”

Hiring & Retention

With the city’s vibrant and competitive economy, finding good employees can be difficult. “Phoenix is a fast growing area and, yes, it has definitely been tough to find the right people. Businesses are paying over $15 an hour for entry level positions. So companies have been forced to evolve if they want to keep talented people.
“We provide competitive salaries and great opportunities for advancement.

“During the hiring process we tell prospective employees that we are a mid-sized company that’s going to listen to them. And we are more flexible with employee schedules than we’ve ever been. It’s often more important for some of our younger employees to have some flexibility in their schedule than money.

“We’ve also partnered with Phoenix Community College here in town. Every employee who is on the management track can take community college courses completely covered by the company. The course must have a relationship to their job function. We have a business administration track and an interior design track.

“Other retailers might ask ‘You’re paying for their education! Aren’t you scared that they’re going to graduate and then get a different job?’ My belief is that more often than not, they will see the benefit of working here. As we continue to expand we will create new, attractive positions for them to further their careers

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“We have seen benefit from employees who take the design track. We don’t offer our customers formal design services but customers do need design advice and a store manager who has taken design courses has the confidence to offer extra value to our customers. We don’t want to be like some of those rent-to-own stores that offer customers one in brown, one in gray and maybe black. And then tell them they should accept that just because they are credit challenged.

Service

“We treat all customers equally regardless of their credit score, giving them lots of great options at affordable price points in stock for one day delivery. If they can’t find what they are looking for we special order. All this because they deserve to have a beautiful home just like everybody else.”

Del Sol’s website invites customers to “Shop by Style”. It offers design inspiration ranging from Traditional, Transitional, Industrial, Vintage Casual to Retro “Mad Men” with colorful supporting visuals; great incentive to visit the stores. And it offers an online survey to help with the styling of every room in the house.

In-store employee training at Del Sol involves the development of personal empathy as well as the usual components of sales and customer service. Said Alex, “We have a traditional on-boarding process, training about policies and procedures. But what makes us different is we advise our line employees to put themselves in their customers’ shoes. If they are not sure what a customer service decision should be, we direct them to do the right thing by the customer.

“For example, if a customer has an issue with a sectional that’s a few days past its one year warranty, it’s company policy not to ‘nickel and dime’ them. We’re not going to tell them they are three days passed the warranty period. Our people have the authority to make the best possible decision in the moment. If they make the wrong decision, that’s OK. We figure it out later and learn from the experience. One bad decision is not going to put us out of business.

“We train our people to look at our mission statement and when they are not sure how to make a decision, read the mission statement, remember it and do what they think is best.
“We empower our employees to make decisions, we trust them. And that’s another reason why our employees like working for us.”

Del Sol’s Company Mission Statement. “Furnishing Dreams. Del Sol is committed to developing long term relationships by exceeding expectations in service, product quality and credit opportunities. Through honesty, credibility and the integrity of family ownership, we will provide genuine value and incomparable service that far surpasses our competition. Our entire team, both sales and support, will provide an exceptional experience and the highest level of professionalism through hard work, training and a sincere concern for the needs of our clients. Always with You!”

Growth Areas

Alex sees two outstanding area potentials for big growth in product areas. “We probably pay more attention than most retailers to our youth furniture offerings. For our Hispanic customers, family is very important.

“We also take our mattress business very seriously, buying mattresses where we’re confident that at any price point we offer the best mattresses available for our customers.
“There’s a huge opportunity to offer mattress quality to mid-to-lower price point credit consumers. In many markets there isn’t a good place for them to shop that has great bedding options that will positively affect the quality of their sleep and their health.”

It’s not always easy to flex to today’s complex society. Said Alex, “At Del Sol we try to remain flexible, not attached to any process or any way of doing business. We are open to evaluate and change any store policy and every process on the fly.

“This has helped us to adapt to our younger consumers. People think our leadership drives this, but it's really our customers and sometimes our employees who are in the driver’s seat.  “Lots of independent retailers have been doing things a certain way for a long time and don’t want to look at ways they could or should change. “Flexibility can be for something as simple as changing a dress code. For example, every retailer has administrative and service positions that are behind the scenes. We used to have strict uniform policy, business casual, with long sleeves and a Del Sol furniture dress shirt. 

“As we started hiring younger people, the average age is now under 35, I noticed how uncomfortable they were in the clothing we were asking them to wear. “So, we relaxed that rule to allow them to wear more casual clothing with the hope that it would make them work better, happier and stay with us longer. “We made the back-end change, then transitioned into other departments and eventually all the way down to sales floors where we used to have an environment with dress shirts and ties. “There are limits, but compared to other stores, the difference is night and day. I believe our more casual environment, including music, is much more in tune with what our customers really want.

“Nobody wants to enter a store and see four salespeople out front wearing ties, all ready to pounce!”
And then there’s the large and attention-getting visual of the Super Hero! You’ll see him dominating Del Sol Furniture’s trucks. “A fun way, a visual cue, telling people that here at Del Sol we take customer service seriously!

“When we show up for a service call, we’re the Super Hero there to fix the product or deal with an issue the first time!”

HFA's Next Gen Group

Alex is an enthusiastic member of Next Gen. “I love this industry and all the opportunities that it has given my family and our employees. My parents gave me a lot of freedom to make decisions, but I noticed that in other family- owned businesses that transition is not always as easy.

“I got involved with the WHFA and then the HFA. So, I figured I should also get involved with HFA’s Next Gen group to send a message to owners of family businesses that it’s OK to trust your kids! Maybe it’s not always the right decision to give them the keys and walk away. But it’s OK to trust them, let them fail and find ways to experiment to ensure business growth into the next generation.

“I stay involved because I’ve met some phenomenal industry people, made some really good friends and get to help to create an environment where younger furniture industry professionals can hang out, create networks and become friends.

“Certainly many more young men and women can benefit by joining Next Gen if only because all of a sudden furniture market goes from, ‘Oh man, I gotta go to furniture market, get up early, shop for furniture all day, go back to my hotel room, eat dinner by myself,’ to ‘Oh man, I can’t wait to go to furniture market because I’m going to see all my friends, we’re going to have a good time and do our jobs and have fun at the same time!’

“We’re always looking for more participants and future leaders to help us take Next Gen (Ngnow.org) to the next level.”

The Future

“I think that we need to continue to stay true to our core consumer. I don’t see that changing, but I can’t tell you what our product is going to look like. I can’t tell you what our stores are going to look like. I can’t tell you what our website’s going to look like. I probably can’t even tell you what that’s going to look like in five years!

“If anybody out there thinks their current business model will be the same 10 years from now, my guess is there isn’t much hope for their business.”
Alex said, “The bed-in-a-box guys have come in, disrupting the market. Their mattresses aren’t all that special, no different, better or worse, than any other mattress sold at retail. The only reason why they’re succeeding is because they’ve created an experience they’ve been able to successfully market.

“And so, I think for us and furniture retailers in general, we should focus on the customer experience and on creating new and better experiences.
“For Del Sol, we want customers to continue to come into our stores, and, when they leave think, that was a great experience!"